Solid Gold Berjangka – The USD/CHF pair weakened again during Asian trading on Friday (October 30), marking its third consecutive day of decline. The currency pair hovered around 0.8220 as the US dollar lost some of its safe-haven appeal, amid growing optimism regarding US-led diplomatic efforts in the Middle East.
Easing tensions have helped alleviate concerns over potential disruptions to oil supplies and global inflationary pressures. This has also dampened expectations for a Federal Reserve interest rate hike in December; the market now estimates a roughly 75% probability of a 25-basis-point increase—a sharp decline from the 84.2% chance seen the previous day.
This sentiment was bolstered by reports that US Vice President JD Vance reached out to Mohsen Rezaei, Secretary of Iran’s Supreme National Security Council, in an effort to resume peace talks. These efforts reportedly have the backing of President Donald Trump, while oil prices have begun to stabilize following an earlier surge driven by geopolitical concerns.
Nevertheless, the decline in USD/CHF may be limited, as the Swiss franc remains under pressure from "carry trade" activity. Switzerland’s low interest rates make the franc an attractive funding currency, prompting market participants to borrow in francs and reallocate those funds into higher-yielding assets.
The Swiss National Bank (SNB) also maintains a neutral stance, with its policy interest rate held at 0%. SNB Chairman Martin Schlegel has indicated that no immediate policy shift is necessary, as domestic inflation remains stable. As long as Swiss monetary policy remains accommodative—and while the possibility of further tightening by the Federal Reserve has not been entirely ruled out—the scope for the franc to strengthen is likely to remain limited. (srh)